The iPhone 4 may be eclipsed on paper... but it's still a hell of a phone.
Don't forget... people are still buying the 3GS today. Raw hardware specs aren't important to a lot of people.
A quick glance at AT&T... I find the Inspire, Atrix and HP Veer each for $99. Verizon has the XPeria Play and Casio Commando. Other carriers carry similar phones at that price.
But a $99 iPhone 4 would absolutely crush the "under $100" market.
If they drop the price on the entry-level model, there is a chance the other models will drop as well. If all these rumors of a "cheaper" iPhone come to pass, there may indeed be a $49 or even free with contract iPhone.